The recently announced two-year tax holiday on electric vehicles does not extend to hybrid vehicles, but discussions are ongoing within the Ministry of Finance on including hybrids in the new measures.
Minister of Energy and Business Development Kerrie Symmonds made that disclosure in an interview with Barbados TODAY on Monday, as he said that persons unable to afford electric vehicles even after the tax incentives, could be assisted with changing their vehicles from reliance on fossil fuels to something “greener”.
Prime Minister Mia Mottley announced during last month’s Budget debate that there would be an excise tax and Value Added Tax (VAT) holiday on electric vehicles, for 24 months commencing April 1, as part of the Government’s push toward the renewable energy goal of carbon neutrality by 2030.
She further disclosed that Government workers currently eligible for interest-free loans of up to $50,000 for vehicle purchases would be eligible for $100,000 if they purchased electric or hybrid vehicles.
Minister Symmonds acknowledged that calls are being made for hybrid vehicles to be included in the VAT holiday, but said it was a decision for the Finance Ministry to make based on the implications for lost revenue.
“So, there is a balancing act that has to take place and very often we say ‘well, the Government could do without that money’, but the truth is that there is a knock-on effect in every department of government once we lose revenue. So it is a matter that is being looked at in greater detail. It is only two or three weeks after the Budget, so I would advise that we just sit tight, allow the people in the Ministry of Finance to reflect, and if there is a further measure to come, it will come,” Symmonds told Barbados TODAY.
“But, in the meantime, what I think the Prime Minister is encouraging us to do is to move from a point of zero to get to a point of 10 out of 10 without having to spend a lot of time in the middle. At the end of the day, once you get to the electric vehicle, you solve the problem completely. The hybrid is only a partial solution. It does save some energy. I drive one but the reality is that I still have to face the pump, maybe not as often but I still have to face the pump and deal with the pressure of the pump. But the reality is that if you go the route of the electric vehicle, then you bypass that,” he added.
Hybrid electric vehicles are powered by an internal combustion engine and an electric motor, which uses energy stored in batteries and cannot be plugged in to charge the battery. On the other hand, an electric vehicle’s battery replaces the fuel tank, and the traditional internal combustion engine is replaced with an electric motor.
“There is also another additive that I think people must now talk about, which is to say that as we come to the point of having more charging ports at people’s homes, then you can use that charging port with a view to fuelling the energy in your own home. So there is a double value to having the electric vehicle. It works in the interest of the car, the car’s operation, and the cost of the car’s operation and it also works with respect to the cost of energy in your own home. That is a process that we will get to as a country in larger measure over the course of the next couple years,” said the Energy Minister.
But he acknowledged that in the aftermath of the COVID-19 pandemic, it would be financially impractical for some people to purchase electric vehicles, even with the recent tax incentive.
“We have to find a solution, perhaps along the lines of biofuels, whether it is biodiesel or something else, that allows for you to just put a conversion kit on your vehicle and change from the reliance on fossil fuel to something that is greener,” said Symmonds.
“That is a process that is happening in other parts of the world and we are looking at that closely. The Ministry is actually doing a number of papers as to the viability of some of these technologies, making recommendations as to the taxing structure for these technologies, and within a few months we would be able to have a deeper and more embracing conversation as to how some of these things can work. I see it as also a business opportunity for the private sector.” kareemsmith@barbadostoday.bb
